TMI Blog2011 (10) TMI 619X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act, 1961 (in short the Act ), being the balance left after its claim for deduction under Section 10B of the Act. 4. Assessee had claimed deduction under Section 10B of the Act for its export business and such deduction was allowed to the extent 90%. The assessment year involved being 2003-04, the deduction available under Section 10B was only 90% of the total eligible profits. However, for the balance 10%, assessee claimed deduction under Section 80HHE of the Act. Both the A.O., as well as ld. CIT(Appeals) in the subsequent appeal of the assessee, held that simultaneous deduction under Sections 10B and 80HHE could not be allowed and for this purpose, reliance was placed on the decision of co-ordinate Bench of this Tribunal in the case of Samtex Fashion Ltd. v. ACIT (92 ITD 535) (Delhi) and ACIT v. Mahavir Spinning Mills Ltd. (110 ITD 211) (Chandigarh). 5. Now before us, assailing the orders of authorities below, learned A.R. submitted that similar issue was considered by another co-ordinate Bench of this Tribunal in I.T.A. Nos. 414 593/Mds/2007 in the case of Covansys (India) Pvt. Ltd. and vide its order dated 18.3.2011, it was held that exemption under Section 80HHE co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 10% profit of such unit to be charged to tax. It seems the legislature was conscious about such a situation as that is why it has specifically excluded deductions u/s 80HH, 80-I, 80-IA and 80-IB but has not excluded under section 80HHE. Section 10B(6)(iii) has specifically mentioned about certain sections under which no simultaneous deduction can be claimed and allowed after claiming deduction u/s 10B of the Act from such profits. But provisions of section 80HHE have not been included and or to say has been specifically excluded meaning thereby the assessee is permitted to claim simultaneous deductions under both sections. It would not be a case of double deduction at all, as has been canvassed by the ld.DR. Let us now tread through the precedents, if any, available in regard to our above finding. The ld.AR has placed reliance on the decision of the Hon'ble Madras High Court rendered in the case of CIT vs M/s Ambatture Clothing Ltd, in Tax Case (Appeal) No.695 of 2010, judgment dated 2.8.2010, which is unreported judgment, a copy of which was filed before the Bench. In this decision, in our opinion, the issue involved is exactly identical to the issue involved in the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority. 7. Thus, the Hon'ble Madras High Court has specifically held that there is no scope for invoking the provisions of section 154 when the deduction under both the sections is specifically available to the assessee. We are not in agreement with the objection of the ld.DR that the decision rendered by the Hon'ble High Court was in the context of rectificatory provision of section 154. The reason for the same are self-explanatory as contained in paragraphs 4 5 of the decision of Hon'ble Madras High Court. Hence, the Hon'ble Madras High Court s decision supports our above finding. 8. Further, the decision of the ITAT, Kolkata, in the case of Hindustan Gum and Chemicals Ltd vs ITO, [2008] 23 SOT 143, again is on the same issue, in which it has been held that the remaining 10% taxable income is part of profits and gains of business or profession. This finding supports the conclusion taken in this regard. 9. Another decision is of ITAT, Delhi Bench, in the case of Dy. CIT vs Interra Software (India) (P) Ltd, [2007] 112 TTJ (Del) 982 [copy on record] also supports our above finding because in that case it has been specifically held that sub-section (5) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per subI. section (1) thereof, is on the profits and gains derived by a 100% export oriented undertaking from the export of articles or things or computer software. If we have a look at Section 80HHC of the Act, sub-section (1) thereof clearly mentions that deduction thereunder is available only on the profits derived by the assessee from export of goods or merchandise. So, both the Sections 10B and 80HHC of the Act specifically stipulate that the profit for being eligible for deduction, should be derived from the export. In this respect, there is no difference between these two sections. Hence, we cannot accept the argument of the learned A.R. that the decision of Hon'ble Bombay High Court in Shah Originals (supra) given in the context of Section 80HHC would not have any applicability. It was clearly held by Hon'ble Bombay High Court in the case of Shah Originals (supra) that exchange fluctuation in EEFC account arising after completion of export activity, did not bear a proximate and direct nexus with the export transaction so as to fall within the expression derived by the assessee. No differentiation has been made out as to the point of conversion of balance in EE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were never part of the amounts invoiced by the assessee and hence there could be no exclusion thereof from export turnover. We are afraid we are unable to accept this line of reasoning. Learned A.R. has not rebutted with any evidence, findings of the A.O. that telecommunication charges were incurred by the assessee for delivery of computer software outside India and such expenses were attributable to the delivery of computer software outside India. When the expenses were incurred for delivery of computer software outside India, even if the assessee had not invoiced such amounts specifically in its bills raised on its customers abroad, the amounts would have definitely been fixed, taking into consideration such telecommunication expenses also. Just because the invoices raised did not specifically mention recovery of telecommunication charges, we cannot say that the billed amounts were exclusive of such telecommunication charges. Assessee while agreeing for delivery of computer software at prices mutually accepted, would have definitely reckoned the telecommunication charges which were to be incurred by it for the delivery of such software outside India. It is not the case of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by us, did not press the related ground in the cross-objection. Coming to the case of the Revenue that such amounts should not have been excluded from total turnover, we are unable to accept. The Special Bench of this Tribunal in the case of Sak Soft Ltd. (supra) has clearly held that whatever has been excluded from export turnover had to be excluded from total turnover also since total turnover included export turnover as well. We are fortified in taking this view by the decision of Hon'ble Bombay High Court in the case of CIT v. Gem Plus Jewellery India Ltd. (330 ITR 175). Therefore, we do not find any merits in the arguments advanced by the assessee or the Revenue in respect of their respective grounds in this regard. For the impugned assessment year also, there is no case for the assessee that the telecommunication charges incurred were not incurred for delivery of computer software outside India. Though the assessee had made a submission that transmission charges included payments in Indian currency to BSNL, etc., definition of export turnover given in clause (iii) of Explanation 2 to Section 10B does not stipulate that expenses have to be incurred in foreign currenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised by the Revenue was not accepted, nothing was brought on record by learned D.R. as to why we should take a different view than that was taken by the Special Bench. The decision of Special Bench is clear that whatever was excluded from export turnover had also to be excluded from total turnover for the purpose of working out deduction under Section 10B of the Act. We, therefore, find no reason to interfere with the order of ld. CIT(Appeals) in this regard. This ground of the Revenue is, therefore, dismissed. 20. Only other ground raised by the Revenue is against the direction of ld. CIT(Appeals) to divide the telecommunication charges in proportion of export sales to the local sales. Case of the Revenue is that assessee had not reported any local sales in India at all. Therefore, the direction for pro rata distribution of telecommunication expenses was not called for, as per learned D.R. 21. Learned A.R. fairly agreed that in the assessee s case, export turnover and total turnover were same and this, in other words, would mean that there were no local sales for the assessee. Therefore, we find that the direction given by the ld. CIT(Appeals) was unwarranted. In the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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